UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.__)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
GTC TELECOM CORP.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
GTC TELECOM CORP.
3151 Airway Ave., Suite P-3
Costa Mesa, California 92626
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 14, 2000
TO OUR SHAREHOLDERS:
You are cordially invited to attend the 2000 Annual Meeting of Shareholders of
GTC Telecom Corp., to be held on Thursday, December 14, 2000 at 9:30 A.M.,
Pacific Time, at the Hilton Costa Mesa, 3050 Bristol St., Costa Mesa, California
92626, to consider and act upon the following proposals, as described in the
accompanying Proxy Statement:
1. To elect five (5) directors to serve until the next Annual Meeting of
Shareholders and thereafter until their successors are elected and qualified;
2. To adopt the Restated Articles of Incorporation of GTC Telecom Corp.;
3. To ratify the appointment of Corbin & Wertz LLP as independent auditors
of the Company for the fiscal year ending June 30, 2001; and
4. To transact such other business as may properly come before the meeting
or any adjournments thereof.
The foregoing items of business are more fully described in the Proxy Statement
accompanying this Notice. The Board of Directors has fixed the close of
business on November 1, 2000, as the record date for Shareholders entitled to
notice of and to vote at this meeting and any adjournments thereof.
By Order of the Board of Directors
/S/ Eric Clemons
Eric Clemons, Secretary
November 13, 2000
Costa Mesa, California
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO COMPLETE,
SIGN AND DATE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. YOUR PROXY
WILL NOT BE USED IF YOU ARE PRESENT AT THE ANNUAL MEETING AND DESIRE TO VOTE
YOUR SHARES PERSONALLY AT THAT TIME.
<PAGE>
GTC TELECOM CORP.
3151 Airway Ave., Suite P-3
Costa Mesa, California 92626
-----------------------------
PROXY STATEMENT
-----------------------------
GENERAL INFORMATION
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
The enclosed Proxy is solicited by the Board of Directors of GTC Telecom Corp.
(the "Company" or "GTC") for use in connection with the Annual Meeting of
Shareholders to be held at the Hilton Costa Mesa, 3050 Bristol St., Costa Mesa,
California 92626 on Thursday, December 14, 2000, at 9:30 a.m., and at any and
all adjournments thereof for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Shareholders.
The persons named as proxies were designated by the Board of Directors (the
"Board") and are officers or directors of the Company. Any Proxy may be revoked
or superseded by executing a later Proxy or by giving notice of revocation in
writing prior to, or at, the Annual Meeting, or by attending the Annual Meeting
and voting in person. Attendance at the meeting will not in and of itself
constitute revocation of the Proxy. All Proxies that are properly completed,
signed and returned to the Company prior to the meeting, and not revoked, will
be voted in accordance with the instructions given in the Proxy. If a choice is
not specified in the Proxy, the Proxy will be voted:
1. FOR election of the director nominees listed below (Proposal 1);
2. FOR the adoption of the Restated Articles of Incorporation of GTC Telecom
Corp. (Proposal 2); and
3. FOR the ratification of the appointment of Corbin & Wertz LLP as
independent auditors of the Company for the fiscal year ending June 30, 2001
(Proposal 3).
Officers of the Company or their designees will tabulate votes cast at the
Annual Meeting. A majority of shares entitled to vote, represented in person or
by proxy, will constitute a quorum at the Annual Meeting. Abstentions and
broker non-votes are each included in the determination of the number of shares
present and voting for the purpose of determining whether a quorum is present,
and each is tabulated separately. In determining whether a proposal has been
approved, abstentions are counted as votes against a proposal and broker
non-votes are not counted.
If any other matters are properly presented at the Annual Meeting for action,
the persons named in the enclosed form of proxy will have discretion to vote on
such matters in accordance with their best judgment. The Company does not know
of any matters other than those set forth above that will be presented at the
Annual Meeting.
This Proxy Statement and the accompanying Proxy are being mailed to shareholders
on or about November 20, 2000. The entire cost of the solicitation of Proxies
will be borne by the Company. It is contemplated that this solicitation will be
primarily by mail. In addition, some of the officers, directors and employees
of the Company may solicit Proxies personally or by telephone, fax, telegraph or
cable. Officers and employees soliciting proxies will not receive any additional
compensation for their services. The Company will reimburse brokers and other
nominees for their reasonable out-of-pocket expenses incurred in forwarding
solicitation material to beneficial owners of shares held of record by such
brokers or nominees.
OUTSTANDING SHARES AND VOTING RIGHTS
The only class of the Company's equity securities currently outstanding is its
Common Stock. Shareholders of record at the close of business on November 1,
2000 are entitled to one vote for each share of Common Stock held by them. As
of November 1, 2000, there were 19,910,907 shares of Common Stock outstanding.
A majority of the shares of the Company's Common Stock present or represented
and entitled to vote at the meeting is required to approve each proposal
presented at the meeting.
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
Directors are elected by the shareholders at each annual meeting to hold office
until their respective successors are elected and qualified. Pursuant to the
Bylaws of the Company, the Board of Directors consists of not less than one (1)
nor more than five (5) directors, and the number is presently fixed at five (5)
members. As a result of the acquisition of GenTel Communications, Inc. by the
Company, the Company's prior Board of Directors resigned and appointed S. Paul
Sandhu and Eric Clemons to fill their vacancies. Clay T. Whitehead was
appointed to the Board on September 16, 1998 to fill one of the vacancies and
John M. Eger was appointed to the Board on October 20, 1999 to fill an
additional vacancy left over from the acquisition of GenTel by the Company.
Voting for the election of directors is non-cumulative, which means that a
simple majority of the shares voting may elect all of the directors. Each share
of Common Stock is entitled to one vote and, therefore, has a number of votes
equal to the number of authorized directors. Proxies may not be voted for more
than five (5) directors.
Although management of the Company expects that each of the following nominees
will be available to serve as a director, in the event that any of them should
become unavailable prior to the Annual Meeting, management's proxies will be
voted for a nominee or nominees designated by management or will be voted for a
lesser number of directors. If there are other nominees, management's proxies
will be voted so as to elect the greatest number of the following nominees.
Management has no reason to believe that any of its nominees, if elected, will
be unavailable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED BELOW.
The nominees for election to the Board of Directors as selected by the Board of
Directors of the Company are set forth below alphabetically:
Eric Clemons
John M. Eger
S. Paul Sandhu
Clay T. Whitehead
Gerald A. DeCiccio
The biographies of nominees, including certain additional information, are set
forth below:
ERIC CLEMONS, 29, has been a director of the Company since August 28, 1998 and
is currently the Company's Chief Operating Officer and a director of the
Company. Mr. Clemons has been with GTC since its inception. Mr. Clemons has
over eight (8) years experience with sales and marketing organizations. Mr.
Clemons most recently was Vice President of Marketing for Intelligent Electronic
Communications managing a staff of 50 employees. Mr. Clemons has attended The
Wharton School of Business executive management programs. Between 1989 and
1994, Mr. Clemons was a licensed NASD broker. As a broker, Mr. Clemons was
subject to three claims related to such engagement and subsequently an
administrative action by the NASD related to his work as a licensed broker. Mr.
Clemons was found liable for an award of $4,000 on one of the actions and
subsequently in April 1997, was fined $65,000 and barred from association with
any NASD member with the ability for re-application following a period of two
years.
JOHN M. EGER, 60, was appointed to the Board on October 20, 1999. Mr. Eger is a
telecommunications lawyer and former counsel to the international law firm
Morrison and Forester and is currently the holder of the prestigious Lionel Van
Deerlin Endowed Chair of Communications and Public Policy at San Diego State
University. He is also the President and CEO of the World Foundation for Smart
Communities, a non-profit, non-governmental educational program dedicated to
helping communities understand the importance of information technology as a
catalyst for transforming life and work in the 21st Century. Mr. Eger formerly
headed CBS Broadcast International, which he established and was Senior Vice
President of the CBS Broadcast Group. From 1971-1973, Mr. Eger was legal
assistant to the chairman of the Federal Communications Commission, and from
1974-1976 served as Telecommunications Advisor to Presidents Nixon and Ford and
was also the Head of the White House Office of Telecommunications Policy (OTP).
Earlier in his career, Professor Eger served as a data communications specialist
and design director of information systems for the Bell System. From 1976
through 1981, he was a Washington, DC based telecommunications attorney. Other
positions Mr. Eger has held include serving as Chairman of the Board of the San
Diego Processing Corporation, Chairman of San Diego Mayor Susan Golding's City
of the Future Advisory Committee and Chairman of Governor Pete Wilson's
California Commission on Information Technology.
S. PAUL SANDHU, 39, has been a director of the Company since August 28, 1998 and
is currently the Company's President and Chief Executive Officer and a director
of the Company. Mr. Sandhu has been with GTC since its inception. Mr. Sandhu
has over ten (10) years experience with start-up and emerging growth companies.
Mr. Sandhu was Co-Founder, President and Co-Owner of Maximum Security
("Maximum"), a Security and surveillance company he started in 1992. While at
Maximum, Mr. Sandhu actively managed a staff of over 200 employees. In 1997 Mr.
Sandhu sold the business to his partner. Mr. Sandhu graduated from the
University of Punjab in India with a degree in Engineering.
CLAY T. WHITEHEAD, 61, was appointed to the Board on September 16, 1998. Mr.
Whitehead is currently President of Clay Whitehead Associates, a strategic
consulting and business development company which concentrates on the
telecommunications and media industries. Clay Whitehead Associates primarily
works with large companies to develop business projects in the areas of
telecommunications and television. Mr. Whitehead has participated in the
formation, strategy development, regulatory posture, and financing of a number
of telecommunications businesses in the United States and internationally. Mr.
Whitehead has also served as a special assistant to President Nixon, with policy
responsibility for NASA, the Atomic Energy Commission, and the National Science
Foundation. From 1971 to 1974, he was director of the U.S. Office of
Telecommunications Policy. From 1979 to 1983, Mr. Whitehead founded and was
president of Hughes Communications, Inc., a subsidiary of Hughes Aircraft
Company.
GERALD A. DECICCIO, 43, was appointed to the Board on November 3, 2000. Mr.
DeCiccio first joined the Company in January 1999 as Chief Financial Officer.
Mr. DeCiccio has over eighteen years experience in the financial and accounting
field. Prior to joining GTC, Mr. DeCiccio was the Vice President of Finance and
Administration for National Telephone & Communications, Inc., ("NT&C") a $150
million inter-exchange carrier and provider of communications products and
services. While at NT&C, Mr. DeCiccio managed NT&C's finance, accounting, human
resources and legal departments. Between 1995 and 1997, Mr. DeCiccio was the
Corporate Controller for Newport Corporation, a $140 million multi-national
manufacturer / distributor of laser and optics products. Prior to that, Mr.
DeCiccio was the Director of Audit and Quality Systems for Sunrise Medical,
Inc., a $750 million multi-national manufacturer / distributor of health care
products. From 1980 to 1984, Mr. DeCiccio was a Supervising Senior Accountant
for Ernst and Young. Mr. DeCiccio received his Bachelor of Science in
Accounting from Loma Linda University, and his Masters of Science in Finance and
Systems Technology from the University of Southern California. Mr. DeCiccio is
a Certified Public Accountant in the State of California.
The following directors presently serve as directors of the following public
corporations:
Clay T. Whitehead Prudential Funds, a number of Prudential mutual funds;
Crosswalk.com, an internet e-commerce company.
John M. Eger WaveExpress, a joint venture of Sarnoff Labs and Wave
Systems; Verance Corporation, an electronic watermarking
and information management company; E-Tel Corp., a
manufacturer of internet telephones; and,
Quentra, a next generation telecom service provider.
Gerald A. DeCiccio CyberOpticLab, an incubator of post-startup companies.
<PAGE>
COMPENSATION OF BOARD OF DIRECTORS
Board members are reimbursed for out-of-pocket expenses and will receive $1,500
and 2,500 options to purchase shares of the Company's restricted (as that term
is defined by Rule 144 of the Securities Act of 1933) Common Stock per quarter.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held six meetings during the year ended
June 30, 2000. Each director attended each of the meetings. The Board does not
meet on any pre-determined schedule but meets on an as needed basis. All
directors who served as a director during the year ended June 30, 2000 attended
all of the meetings of the Board of Directors. The Board of Directors has an
Audit Committee but does not have a compensation committee or a nominating
committee.
The Audit Committee of the Board of Directors currently consists of Messrs.
Whitehead, Eger, and Sandhu. The Audit Committee held one meeting during the
year ended June 30, 2000. The Audit Committee reviews the internal accounting
procedures of GTC and consults with and reviews the services provided by GTC's
independent accountants.
<PAGE>
PROPOSAL TWO
ADOPTION OF RESTATED ARTICLES OF INCORPORATION
On October 30, 2000, the Board of Directors approved, subject to stockholder
approval, the Restated Articles of Amendment of GTC Telecom Corp. As previously
discussed in the Company's public filings, the Company was originally organized
as Bobernco, Inc. on May 17, 1994. Following the initial filing of the
Company's original Articles of Incorporation, the Company filed on March 30,
1998, an amendment to its articles increasing its authorized common stock to
50,000,000 shares par value $0.001 and effectuating a forward split of the then
outstanding shares on a 2 for 1 basis. An additional amendment was filed on
September 3, 1998 in conjunction with the Company's acquisition of GenTel
Communications, Inc. changing the Company's name to GTC Telecom. As approved by
shareholders at the Company's last annual meeting, an additional amendment was
filed authorizing 10,000,000 shares of preferred stock.
In order to simplify the Company's Articles of Incorporation and the various
subsequent amendments, the Board of Directors believes it in the Company's best
interest to consolidate the original Articles of Incorporation and the
subsequent amendments into a single Restated Articles of Incorporation. In
addition, in order to clarify some confusion as to the Company official name,
the suffix "Corp." shall be appended to the Company's name as stated in the
Company's Restated Articles of Incorporation so as to read "GTC Telecom Corp."
Additionally, Article 11 of the Company's original Articles of Incorporation
relating to preemptive rights has been removed. A copy of the proposed restated
Articles of Incorporation is attached hereto to this proxy as Appendix A.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE GTC RESTATED
ARTICLES OF INCORPORATION.
<PAGE>
PROPOSAL THREE
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has appointed Corbin & Wertz LLP, independent auditors,
to audit the consolidated financial statements of the Company for the fiscal
year ending June 30, 2001 and seeks ratification of such appointment. In the
event of a negative vote on such ratification, the Board of Directors will
reconsider its appointment.
Representatives of Corbin & Wertz LLP are expected to be present at the Annual
Meeting, will have the opportunity to make a statement, if they desire to do so
and are expected to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPOINTMENT OF CORBIN & WERTZ
LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING JUNE 30,
2001.
<PAGE>
OTHER INFORMATION
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are set forth below, along
with their biographies. See "ELECTION OF DIRECTORS" for the biographies of the
Company's directors.
Name Positions
S. Paul Sandhu President and Chief Executive Officer, and Director
Eric Clemons Chief Operating Officer and Director
Gerald DeCiccio Chief Financial Officer
Mark Fleming Executive Vice President
John M. Eger Director
Clay T. Whitehead Director
MARK FLEMING, 42, joined the Company in October 1998 as Executive Vice
President. Mr. Fleming has sixteen years of business strategy, planning, and
analysis experience within the competitive consumer products / services
industries. For the past seven years, Mr. Fleming worked in the
telecommunications industry, holding several finance and marketing management
positions at MCI. Some of the key business / operational issues that Mr.
Fleming managed while at MCI included pricing strategy, market positioning, new
product development, sales channel and customer service performance reviews,
capital investment decisions and overall business planning / analysis for
Residential Markets and Local Services divisions. Mr. Fleming received his
Bachelor of Arts degree in Business Administration from Principia College in
1980, and attained his Masters in Business Administration, with honors from the
University of Southern California in 1986.
<PAGE>
EXECUTIVE COMPENSATION
The Summary Compensation Table shows certain compensation information for
services rendered in all capacities for the fiscal years ended June 30, 2000,
1999 and 1998. Other than as set forth herein, no executive officer's salary
and bonus exceeded $100,000 in any of the applicable years. The following
information includes the dollar value of base salaries, bonus awards, the number
of stock options granted and certain other compensation, if any, whether paid or
deferred.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------- AWARDS PAYOUTS
------------------------------------
OTHER RESTRICTED SECURITIES ALL
NAME AND ANNUAL STOCK UNDERLYING LTIP OTHER
PRINCIPAL FISCAL SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) ($) SARS (#) ($) ($)
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul Sandhu 2000 $ 126,000 -0- -0- -0- 217,500 -0- -0-
(President, CEO) 1999 85,500 -0- -0- -0- -0- -0- -0-
1998 40,000 -0- -0- 76,000 200,000 -0- -0-
Eric Clemons 2000 133,000 -0- -0- -0- 167,500 -0- -0-
(COO) 1999 90,836 -0- -0- -0- -0- -0- -0-
1998 40,500 -0- -0- 19,000 100,000 -0- -0-
Gerald DeCiccio 2000 139,708 -0- -0- -0- 75,000 -0- -0-
(CFO) 1999 54,102 -0- -0- -0- 150,000 -0- -0-
1998 -0- -0- -0- -0- -0- -0- -0-
Mark Fleming 2000 121,042 -0- -0- -0- 75,000 -0- -0-
(VP) 1999 62,083 -0- -0- -0- 100,000 -0- -0-
1998 -0- -0- -0- -0- -0- -0- -0-
</TABLE>
<PAGE>
STOCK OPTIONS GRANTED TO EXECUTIVE OFFICERS BY THE COMPANY
The following table summarizes stock option grants by the Company during the
fiscal year ended June 30, 2000 to each of the executive officers identified in
the Summary Compensation Table above. These stock options relate to the options
to purchase the common stock of GTC Telecom Corp.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
PERCENT OF TOTAL
NUMBER OF SECURITIES OPTIONS/SAR'S GRANTED
UNDERLYING TO EMPLOYEES IN FISCAL EXERCISE OF BASE PRICE
NAME OPTIONS/SAR'S GRANTED (#) YEAR ($/SH) EXPIRATION DATE
<S> <C> <C> <C> <C>
Paul Sandhu 17,500(1) 1% $ 0.01 5/1/03
5,000(2) <1% $ 1.25 5/1/04
5,000(2) <1% $ 1.25 5/1/05
5,000(2) <1% $ 1.25 5/1/06
5,000(2) <1% $ 1.25 5/1/07
5,000(2) <1% $ 1.25 5/1/08
25,000(3) 1.4% $ 1.25 5/1/10
30,000(4) 1.7% $ 1.10 10/18/05
30,000(4) 1.7% $ 1.10 10/18/06
30,000(4) 1.7% $ 1.10 10/18/07
30,000(4) 1.7% $ 1.10 10/18/08
30,000(4) 1.7% $ 1.10 10/18/09
Eric Clemons 17,500(5) 1% $ 0.01 5/1/03
5,000(2) <1% $ 1.25 5/1/04
5,000(2) <1% $ 1.25 5/1/05
5,000(2) <1% $ 1.25 5/1/06
5,000(2) <1% $ 1.25 5/1/07
5,000(2) <1% $ 1.25 5/1/08
25,000(3) 1.4% $ 1.25 5/1/10
20,000(4) 1.7% $ 1.10 10/18/05
20,000(4) 1.7% $ 1.10 10/18/06
20,000(4) 1.7% $ 1.10 10/18/07
20,000(4) 1.7% $ 1.10 10/18/08
20,000(4) 1.7% $ 1.10 10/18/09
Gerald DeCiccio 25,000(3) 1.4% $ 1.25 5/1/10
50,000(4) 2.8% $ 1.10 10/18/10
Mark Fleming 25,000(3) 1.4% $ 1.25 5/1/10
50,000(4) 2.8% $ 1.10 10/18/10
<FN>
(1) Represents options issued on 5/1/00 pursuant to Mr. Sandhu's Director Compensation agreement.
(2) Represents options issued on 5/1/00 outside of the 2000 Stock Option Plan.
(3) Represents options issued on 5/1/00 in accordance with the 2000 Stock Option Plan. In the event that the
trading price of the Company's Common Stock closes at or above $5.00 per share for a minimum of five (5)
consecutive trading days, the Options shall become fully vested. The options are exercisable through May 2010.
(4) Represents options issued on 10/18/99 in accordance with the 2000 Stock Option Plan.
(5) Represents options issued on 5/1/00 pursuant to Mr. Clemon's Director Compensation agreement.
</TABLE>
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
The following table summarizes exercises of stock options during the fiscal year
ended June 30, 2000 by each of the executive officers and the fiscal year-end
value of unexercised options for such executive officers.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN
SECURITIES UNDERLYING THE-MONEY OPTION/SARS
SHARES ACQUIRED ON VALUE OPTIONS/SARS AT FY-END (#) AT FY-END ($)
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Paul Sandhu 200,000 329,000 17,500 / 200,000 14,592 / 0
Eric Clemons 100,000 181,750 17,500 / 15,000 14,592 / 0
Gerald DeCiccio 25,000 42,500 41,667 / 158,333 0 / 0
Mark Fleming 0 n/a 40,000 / 135,000 0 / 0
</TABLE>
EMPLOYMENT AGREEMENTS
On December 1, 1998, the Company entered into an Employment Agreement with Paul
Sandhu, the Company's President and CEO, whereby the Company will pay Mr. Sandhu
an annual salary of $84,000. Pursuant to the Agreement, Mr. Sandhu's salary
shall increase to $168,000 should the Company either maintain a positive cash
flow for two consecutive months, or the Company successfully completes a Form
SB-2 registered offering of its securities. On January 15, 1999 the Company
voluntarily agreed to increase his salary to $168,000. In addition to his
annual salary, the Agreement confirmed the prior issuance of options to purchase
200,000 shares of the Company's Common Stock at an exercise price of $0.2375
previously granted to Mr. Sandhu pursuant to an employment agreement between Mr.
Sandhu and GenTel dated January 5, 1998. These options vested upon execution of
the Agreement. The Agreement may be canceled at any time by either the Company
or Mr. Sandhu. However, if the Company terminates the Agreement without cause,
as defined in the Agreement, the Company shall be obligated to pay Mr. Sandhu
25% of his annual salary as severance.
On December 1, 1998, the Company entered into an Employment Agreement with Eric
Clemons, the Company's Chief Operating Officer ("COO"), whereby the Company will
pay Mr. Clemons an annual salary of $76,000. Pursuant to the Agreement, Mr.
Clemons' salary shall increase to $152,000 should the Company either maintain a
positive cash flow for two consecutive months, or the Company successfully
completes a Form SB-2 registered offering of its securities. On January 15,
1999 the Company voluntarily agreed to increase his salary to $152,000. In
addition to his annual salary, the Agreement confirmed the prior issuance of
options to purchase 100,000 shares of the Company's Common Stock at an exercise
price of $0.2375 previously granted to Mr. Clemons pursuant to an employment
agreement between Mr. Clemons and GenTel dated January 5, 1998. These options
vested upon execution of the Agreement. The Agreement may be canceled at any
time by either the Company or Mr. Clemons. However, if the Company terminates
the Agreement without cause, as defined in the Agreement, the Company shall be
obligated to pay Mr. Clemons 25% of his annual salary as severance.
On December 1, 1998, the Company entered into an Employment Agreement with
Gerald DeCiccio, the Company's Chief Financial Officer, whereby the Company will
pay Mr. DeCiccio an annual salary of $105,000. Pursuant to the Agreement, Mr.
DeCiccio's salary shall increase to $144,000 should the Company either maintain
a positive cash flow for two consecutive months, or the Company successfully
completes a Form SB-2 registered offering of its securities. On December 23,
1999 the Company voluntarily agreed to increase his
<PAGE>
salary to $144,000. In addition to his annual salary, the Agreement grants Mr.
DeCiccio options to purchase 150,000 shares of the Company's Common Stock.
Twenty-five thousand (25,000) of the options are set to vest six (6) months from
the execution of the Agreement at an exercise price of $.01, expiring three
years from the date of vesting if not exercised. The remaining 125,000 options
are scheduled to vest in 1/3 increments each following year provided that Mr.
DeCiccio is employed with the Company. The Agreement may be canceled at any
time by either the Company or Mr. DeCiccio. However, if the Company terminates
the Agreement without cause, as defined in the Agreement, the Company shall be
obligated to pay Mr. DeCiccio 25% of his annual salary as severance.
On October 14, 1998, the Company entered into an Employment Agreement with Mark
Fleming, the Company's Executive Vice-President, whereby the Company will pay
Mr. Fleming an annual salary of $70,000. Pursuant to the Agreement, Mr.
Fleming's salary shall increase to $107,000 should the Company either maintain a
positive cash flow for two consecutive months, or the Company successfully
completes a Form SB-2 registered offering of its securities. On January 23,
2000 the Company voluntarily agreed to increase his salary to $130,000. In
addition to his annual salary, the Agreement grants Mr. Fleming options to
purchase 100,000 shares of the Company's Common Stock. Ten thousand (10,000) of
the options are set to vest six (6) months from the execution of the Agreement
at an exercise price of $.01, expiring three years from the date of vesting if
not exercised. The remaining 90,000 options are scheduled to vest in 1/3
increments each following year provided that Mr. Fleming is employed with the
Company. The Agreement may be canceled at any time by either the Company or Mr.
Fleming. However, if the Company terminates the Agreement without cause, as
defined in the Agreement, the Company shall be obligated to pay Mr. Fleming 25%
of his annual salary as severance.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
LOAN TO COMPANY BY S. PAUL SANDHU
The Company borrows funds from the Company's President & CEO for working capital
purposes. The borrowings accrue interest at 10% and are due on demand. During
fiscal 2000 and 1999, the Company borrowed $48,500 and $25,000 and made payments
in the amount of $71,351 and none, respectively. As of June 30, 2000, the note
payable to the Company's President & CEO was $2,149. No interest was accrued or
paid as of June 30, 2000 and 1999.
CANCELLATION OF CERTAIN SHARES OF STOCK HELD BY MANAGEMENT
During fiscal year 2000, Mr. Sandhu and Mr. Clemons canceled 619,848 and
154,962, respectively, shares of the Company's common stock held by each of
them. It was determined that these shares were not cancelled in a timely
matter. As a result, these cancellations are reflected as a reduction in the
outstanding shares as of July 1, 1998.
OPTIONS ISSUED TO DIRECTORS OF THE COMPANY
On May 4, 1999, the Company issued 526,316 shares of "restricted" (as that term
is defined under Rule 144 of the Securities Act of 1933) Common Stock to Clay T.
Whitehead, a director of the Company, pursuant to an option agreement entered
into between the Company and Mr. Whitehead in April, 1999 which granted Mr.
Whitehead an option to purchase up to 526,316 shares of the Company's Common
Stock at an exercise price of $0.475 per share. A total of approximately
$352,632 of compensation expense was recorded at the date of grant in April
1999. The issuance was exempt under Section 4(2) of the Securities Act of 1933.
On October 20, 1999, the Company granted 526,000 options to purchase 526,000
shares of "restricted" (as that term is defined under Rule 144 of the Securities
Act of 1933) Common Stock, at an exercise price of $1.00 per share, to John M.
Eger, a director of the Company, pursuant to an option agreement entered into
between the Company and Mr. Eger. The issuance was exempt under Section 4(2) of
the Securities Act of 1933.
On May 1, 2000, the Board issued options to purchase an aggregate of 57,500
shares of the Company's Common Stock, at an exercise price of $0.01, valued at
$71,300 to the members of the Board pursuant to their agreement of director
compensation. The options are exercisable through May 2003.
On May 1, 2000, the Board granted, pursuant to the Option Plan, options to
purchase 100,000 shares of restricted Common Stock, at an exercise price of
$1.25 per share (the fair market value of the Company's Common Stock on the day
of grant) to the members of the Board. However, in the event that the trading
price of the Company's Common Stock closes at or above $5.00 per share for a
minimum of five (5) consecutive trading days, the Options shall become fully
vested. The options are exercisable through May 2010.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of October 31, 2000, with
respect to each person who is known by the Company to own beneficially 5% or
more of the Company's outstanding Common Stock, the number of shares and the
percentage so owned, as well as the beneficial ownership of Common Stock of the
Company by the directors, the executive officers of the Company and all
directors and executive officers as a group.
<TABLE>
<CAPTION>
COMMON STOCK PERCENT OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OUTSTANDING OUTSTANDING
----------------------- ----------------------------- ---------- ------------
<S> <C> <C> <C>
Paul Sandhu(1)
3151 Airway Avenue, Suite P-3
Common Stock Costa Mesa, CA 92626. 4,051,308 20.29%
----------------------- ----------------------------- ---------- ------------
Eric Clemons(2)
3151 Airway Avenue, Suite P-3
Common Stock Costa Mesa, CA 92626. 1,159,344 5.81%
----------------------- ----------------------------- ---------- ------------
Gerald A. DeCiccio(3)
3151 Airway Avenue, Suite P-3
Common Stock Costa Mesa, CA 92626. 113,334 < 1%
----------------------- ----------------------------- ---------- ------------
Mark Fleming(4)
3151 Airway Avenue, Suite P-3
Common Stock Costa Mesa, CA 92626. 80,000 < 1%
----------------------- ----------------------------- ---------- ------------
John M. Eger(5)
3151 Airway Avenue, Suite P-3
Common Stock Costa Mesa, CA 92626. 531,000 2.66%
----------------------- ----------------------------- ---------- ------------
Clay T. Whitehead(6)
3151 Airway Avenue, Suite P-3
Common Stock Costa Mesa, CA 92626. 543,816 2.72%
----------------------- ----------------------------- ---------- ------------
Reet Trust(7)
21520 Yorba Linda,Suite 6227
Common Stock Yorba Linda, CA 92887 2,000,000 10.02%
----------------------- ----------------------------- ---------- -------------
All Directors and
Officers as a
Group (6
Persons in total) 6,478,802 32.45%
----------------------- ----------------------------- ---------- -------------
<FN>
(1) Includes 47,500 options to acquire shares of Company common stock in
accordance with Mr. Sandhu's director compensation agreement and the Company's
employee benefit plan. Does not include an aggregate of 170,000 unvested
options to acquire shares of Company common stock granted in accordance with the
Company's employee benefit plan.
(2) Includes 37,500 options to acquire shares of Company common stock in
accordance with Mr. Clemons' director compensation agreement and the Company's
employee benefit plan. Does not include an aggregate of 130,000 unvested
options to acquire shares of Company common stock in accordance with the
Company's employee benefit plan.
(3) Includes an aggregate of 93,334 options to acquire shares of Company common
stock in accordance with Mr. DeCiccio's employment agreement and the Company's
employee benefit plan. Does not include an aggregate of 106,666 unvested
options to acquire shares of Company common stock in accordance with the
Company's employee benefit plan.
(4) Includes an aggregate of 80,000 options to acquire shares of Company common
stock in accordance with Mr. Fleming's employment agreement and the Company's
employee benefit plan. Does not include an aggregate of 95,000 unvested options
to acquire shares of Company common stock in accordance with the Company's
employee benefit plan.
(5) Includes an aggregate of 531,000 options to acquire shares of Company
common stock in accordance with Mr. Eger's director compensation agreement.
Does not include an aggregate of 25,000 unvested options to acquire shares of
Company common stock in accordance with the Company's benefit plan.
(6) Includes an aggregate of 17,500 options to acquire shares of Company common
stock in accordance with Mr. Whitehead's director compensation agreement. Does
not include an aggregate of 25,000 unvested options to acquire shares of Company
common stock in accordance with the Company's benefit plan.
(7) The trustee of the Reet Trust is Teg Sandhu, father of S. Paul Sandhu.
However, S. Paul Sandhu disclaims any beneficial ownership to the shares held by
the Reet Trust.
(8) In calculating percentage ownership, all shares of Common Stock which a
named shareholder has the right to acquire within 60 days from the date of this
Proxy Statement upon exercise of options or warrants are deemed to be
outstanding for the purpose of computing the percentage of Common Stock owned by
that shareholder, but are not deemed to be outstanding for the purpose of
computing the percentage of Common Stock owned by any other shareholders.
</TABLE>
<PAGE>
The Company believes that the beneficial owners of securities listed above,
based on information furnished by such owners, have sole investment and voting
power with respect to such shares, subject to community property laws where
applicable. Beneficial ownership is determined in accordance with the rules of
the Commission and generally includes voting or investment power with respect to
securities. Shares of stock subject to options or warrants currently
exercisable, or exercisable within 60 days, are deemed outstanding for purposes
of computing the percentage of the person holding such options or warrants, but
are not deemed outstanding for purposes of computing the percentage of any other
person.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own more than ten percent of a
registered class of the Company's equity securities to file with the SEC initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, directors and greater than
ten percent shareholders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file. To the Company's knowledge,
based solely on the review of copies of such reports furnished to the Company
and written representations that no other reports were required and to the best
of its knowledge, during the year ended June 30, 2000, all Section 16(a) filing
requirements applicable to the Company's officers, directors and greater than
ten percent shareholders were complied with.
SHAREHOLDER PROPOSALS
Any shareholder desiring to submit a proposal for action at the 2001 Annual
Meeting of Shareholders and presentation in the Company's proxy statement with
respect to such meeting should arrange for such proposal to be delivered to the
Company's offices, 3151 Airway Ave., Suite P-3, Costa Mesa, California 92626,
addressed to Eric Clemons, no later than September 1, 2001 in order to be
considered for inclusion in the Company's proxy statement relating to the
meeting. Matters pertaining to such proposals, including the number and length
thereof, eligibility of persons entitled to have such proposals included and
other aspects are regulated by the Securities Exchange Act of 1934, Rules and
Regulations of the Securities and Exchange Commission and other laws and
regulations to which interested persons should refer. The Company anticipates
that its next annual meeting will be held in December 2001.
On May 21, 1998, the Securities and Exchange Commission adopted an amendment to
Rule 14a-4, as promulgated under the Securities and Exchange Act of 1934, as
amended. The amendment to Rule 14a-4(c)(1) governs the Company's use of its
discretionary proxy voting authority with respect to a shareholder proposal
which is not addressed in the Company's proxy statement. The new amendment
provides that if a proponent of a proposal fails to notify the Company at least
45 days prior to the month and day of mailing of the prior year's proxy
statement, then the Company will be allowed to use its discretionary voting
authority when the proposal is raised at the meeting, without any discussion of
the matter in the proxy statement.
With respect to the Company's 2001 Annual Meeting of Shareholders, if the
Company is not provided notice of a shareholder proposal, which the shareholder
has not previously sought to include in the Company's proxy statement, by
September 1, 2001, the Company will be allowed to use its voting authority as
described above.
<PAGE>
OTHER MATTERS
The Company has enclosed with this Proxy Statement a copy of the Company's
Annual Report on Form 10-KSB to Shareholders for the year ended June 30, 2000.
Management knows of no other matters to come before the meeting. If, however,
any other matter properly comes before the meeting, the persons named in the
enclosed Proxy form will vote in accordance with their judgment upon such
matter.
Shareholders who do not expect to attend in person are urged to promptly execute
and return the enclosed Proxy.
By order of the Board of Directors
/S/ Eric Clemons
Eric C. Clemons
Secretary
Costa Mesa, California
November 13, 2000
<PAGE>
PROXY
GTC TELECOM CORP.
3151 Airway Ave., Suite P-3, Costa Mesa, California 92626
Proxy for Annual Meeting of Shareholders - December 14, 2000
(THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
The undersigned hereby appoint S. PAUL SANDHU and ERIC CLEMONS, and each of
them, as proxy or proxies for the undersigned, with full power of substitution,
who may act by unanimous vote of said proxies or their substitutes as shall be
present at the meeting, or, if only one be present, then the one shall have all
the powers hereunder, to represent and to vote, as designated herein
(If no direction is made, this Proxy will be voted FOR Proposals 1, 2, and 3),
all of the shares of GTC Telecom Corp. (the "Company") standing in the name of
the undersigned, at the Annual Meeting of Shareholders of the Company to be held
on Thursday, December 14, 2000, at 9:30 a.m. at the Hilton Costa Mesa, 3050
Bristol St., Costa Mesa, California, 92626, and any adjournment thereof. In
their discretion, the proxies are authorized to vote upon such other business as
may properly come before the meeting.
PLEASE MARK YOUR VOTES AS INDICATED IN THIS PROXY
The Board of Directors recommends a vote FOR Items 1, 2 & 3.
WITHHELD
FOR FOR
ITEM 1 - ELECTION OF DIRECTORS
NOMINEES:
ERIC C. CLEMONS [ ] [ ]
S. PAUL SANDHU [ ] [ ]
JOHN M. EGER [ ] [ ]
CLAY T. WHITEHEAD [ ] [ ]
GERALD A. DECICCIO [ ] [ ]
WITHHELD FOR: (Write that nominee's name in the space provided
below)._________________________________________
FOR AGAINST ABSTAIN
ITEM 2 - TO ADOPT THE RESTATED ARTICLES OF
INCORPORATION OF GTC TELECOM CORP. [ ] [ ] [ ]
FOR AGAINST ABSTAIN
ITEM 3 - TO RATIFY THE SELECTION OF CORBIN &
WERTZ LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS [ ] [ ] [ ]
Signature(s) ________________________________________ Date _____________
________________________________________
(Print Name)
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
<PAGE>
APPENDIX - A
RESTATED ARTICLES OF INCORPORATION
OF
GTC TELECOM CORP.
ARTICLE I
The name of this corporation is:
GTC TELECOM CORP.
ARTICLE II
Offices for the transaction of any business of the Corporation, and where
meetings of the Board of Directors and of Stockholders may be held, may be
established and maintained in any part of the State of Nevada, or in any other
state, territory, or possession of the United States.
ARTICLE III
The nature of the business is to engage in any lawful activity.
ARTICLE IV
The capital stock of the Corporation shall consist of 50,000,000 shares of
Common Stock, $0.001 par value and 10,000,000 shares of preferred stock, $0.001
par value.
The shares of Preferred Stock may be issued from time to time in one or
more series. The Board of Directors of the Corporation (the "Board of
Directors") is expressly authorized to provide for the issue of all or any of
the shares of the Preferred Stock in one or more series, and to fix the number
of shares and to determine or alter for each such series, such voting powers,
full or limited, or no voting powers, and such designations, preferences, and
relative, participating, optional, or other rights and such qualifications,
limitations, or restrictions thereof, as shall be stated and expressed in the
resolution or resolutions adopted by the Board of Directors providing for the
issue of such shares (a "Preferred Stock Designation") and as may be permitted
by the General Corporation Law of the State of Nevada. The Board of Directors
is also expressly authorized to increase or decrease (but not below the number
of shares of such series then outstanding) the number of shares of any series
subsequent to the issue of shares of that series. In case the number of shares
of any such series shall be so decreased, the shares constituting such decrease
shall resume the status that they had prior to the adoption of the resolution
originally fixing the number of shares of such series."
ARTICLE V
The members of the governing board of the corporation shall be styled
directors, of which there shall be no more than five. The Directors of this
corporation need not be stockholders.
ARTICLE VI
This corporation shall have perpetual existence.
ARTICLE VII
Corporation shall have president, a secretary, a treasurer and a resident
agent, to be chosen by the Board of Directors, any person may hold two or more
offices.
ARTICLE VIII
The Capital Stock of the corporation, after the fixed consideration thereof
has been paid or performed, shall not be subject to assessment, and the
individual liable for the debts and liabilities of the Corporation, and the
Articles of Incorporation shall never be amended as the aforesaid provisions.
ARTICLE IX
No director or officer of the corporation shall be personally liable to the
corporation of any of its stockholders for the damages for breach of fiduciary
duty as a director or officer involving any act or omission of any such director
or officer provided, however, that the foregoing provision shall not eliminate
or limit the liability of a director or officer for acts or omissions which
involve intentional misconduct, fraud or a knowing violation of law, or the
payment of dividends in violation of Section 78.300 of the Nevada Revised
Statutes. Any repeal or modification of this Article of the Stockholders of the
Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director or officer of the Corporation
for acts or omissions prior to such repeal or modification.
The number of shares of the corporation outstanding and entitled to vote on
this Restated Articles of Incorporation is 19,910,907; that the said change(s)
and the Restated Articles of Incorporation have been consented to and approved
by a majority all of the stockholders of each class of stock outstanding and
entitled to vote thereon.
________________________________ _____________________________
S. Paul Sandhu Eric A. Clemons
President Secretary
